The investment fund that previously attempted to take over French airline Aigle Azur has submitted an eleventh-hour rescue package for the troubled French carrier XL Airways. Lu Azur, previously a 20% shareholder of Aigle Azur, plans to rescue XL Airways by taking on approximately 50% of its existing staff, along with two of its four-strong Airbus A330 fleet.
French court ruling
According to Air Transport World, the offer from Lu Azur was submitted shortly before a French court was ready to schedule a decision on permanently liquidating the airline. With the new offer now on the table, the French legal system will examine the offer in detail, and plans to make a final ruling on the approach by October 4.
As part of the takeover plan, Lu Azur intends to eliminate expensive leasing contracts at XL Airways, along with some of the company’s substandard cabins. The investor also plans to remove unprofitable destinations from the carrier’s portfolio, including La Reunion, Martinique and Guadeloupe.
Lu Azur also intends to rescue the jobs of 276 employees at XL Airways, which is just under half of the current workforce. All of the crews associated with the two Airbus A330 jets that the company intends to operate would also be retained. XL Airways has suspended all flights as it awaits a decision from the courts.
Lu Azur controversy
Investment vehicle Lu Azur had caused controversy during the final days of Aigle Azur’s existence when it attempted to overthrow the company’s CEO Frantz Yvelin. This was ultimately blocked by the French courts, despite strong criticisms made by Lu Azur of Yvelin’s long-haul expansion strategy.
XL Airways had first announced that it was in financial difficulties just weeks ago, suspending all flight operations until October 3. The company conceded that it was on the verge of liquidation, and apologized “for the inconvenience this situation may have caused our valuable customers. Our teams are fully committed to working fully towards delivering our customers with our service”.
This came just days after the low-cost French airline suspended ticket sales, indicating that the move had occurred due to financial difficulties. XL Airways had then sought out Air France for a rescue deal, with the carrier reportedly requiring in the region of $38.6 million in financing. The budget airline had promoted itself as a low-cost long-haul option for Air France, but no deal has been forthcoming.
XL Airways operates out of Paris Charles de Gaulle and other French cities, concentrating its operations on US and Caribbean destinations in particular. The travails of the company once again underline just how competitive and challenging the airline industry is currently, particularly for the crowded budget end of the market.
Numerous smaller airlines have experienced financial difficulties during 2019, and even a heavyweight such as Etihad was forced to lay off pilots in the midst of fiscal problems.